German taxpayers = useful idiots

Tyler Durden highlights a Wikileaked cable from the US ambassador to Germany (dated 12 Feb 2010) telling Washington that the German government is trying to hide from its own people the fact that they are going to be soaked to pay for Greece’s profligacy. Excerpt:

2. (C) Prior to the February 11 EU Summit in Brussels, there was much hair pulling in Berlin over the wisdom of participating in some sort of Greek rescue. No one savored the idea of explaining to German taxpayers, already concerned about Germany’s record deficit, that they would be footing the bill for the irresponsible behavior of another country. A Finance Ministry official explained to us that many Germans felt disgusted by the situation in Greece: “While Germans have spent the past decade tightening their belts and improving their competitiveness, Greek civil servants still earn 14 months’ salary per year.” A recent editorial in the German daily Frankfurter Allgemeine Zeitung (FAZ) asked rhetorically whether Germans would need to work until age 69 just to finance early retirement for Greek workers. With important upcoming elections in the state of North Rhine-Westphalia, bailing out Greece would not be a vote winner.

Congratulations, Germans. Your Eurocratic elites sold you down the river.

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Lest anyone hide from the lesson of shared sacrifice that comes with this story, OWS is saying that the capitalism practiced in American allows the 1% to avoid the pain of the Great Recession while insisting that the 99% pick up the tab. Further, sacrifice implies pain or at least discomfort. Shared sacrifice implies a degree of equivalence. Making do with less (sacrifice) obviously requires those with more to pay more (or to receive less) else the equivalence is meaningless.

Looks like you might need to edit this post. When writing about new info revealed via the leaked cables, you’re supposed to begin by observing that we didn’t really learn anything new…before posting about the new things we learned. I blame your blogging break for this lapse in protocol. 🙂

The second week of Rock Center with Brian Williams found the news magazine pursuing its mixture of wildly diverse stories, any one of which could have used a lot more time and a lot more reporting. Yet the host undercut his own enterprise by appearing most eager of all to conduct his in-studio interview with Tina Fey.

Fey was, as always, on point. Following Richard Engel’s report earlier in the hour about Greece’s economic problems and the European Union’s response, Fey noted that she is half-Greek, half-German, “and I am so tired of bailing myself out.”

The German polity has gone along with a number of previous attempts to unify Europe in a continental system, it’s been the German ambition, their way of matching the old British and French Empires, as long as Germany has been a united country (Brief interlude 1945-89). Bright side: This one didn’t even end up in sawdust bread and bombed cities.

The German economy benefited mightily from the Euro-scheme. Like a number of other imperial schemes, it opened new markets via unnatural trade and monetary arrangements, and it wasn’t workable in the long term. Unlike most, this was so hare-brained, the long-term wound up being less than 20 years. But that’s really on schedule for Germany’s Empire Experiment series, whether ruthlessly aristocratic, ruthlessly nationalistic, or lately, ruthlessly liberal.

So, can it be break up the Euro and return to the Deutschmark time now?

nah – German Imperial ambitions doesn’t die that quick – now it is a revised Euro zone – dropping the peripheral countries and having a “Euro elite” – Merkel and Sarkozy ironing out the details at this moment.

Krugman has an interesting column on his blog about the welfare states is to blame meme. Seems that the Scandanavians who by objective measures have the largest social welfare states have stable healthy economies and that Germany has more of a welfare state than any of the GIPS.

So it seems we won’t be able to blame this all on those Euro welfare states – the issues are more complex and if we learn anything from this it will be from examining the complex issues instead of resorting to the usual “welfare states bah!” theme.

And yes – the German people have profited from the benefits of the EURO and the imbalances that existed within the Euro – German monetary policy has exacerbated the problems and the Germans have been the ones running the show – their one solution to all countries approach to the problem certainly did not make things better. They are not poor unfortunate victims here.

The Greeks were clearly deplorable – but Spain do remember – had a very healthy government budget surplus as did Ireland before both countries got walloped by the Iceland-Lehman-Housing Bubble disaster.

Being dropped from the Euro will benefit most of those countries – certainly Italy, Spain and Ireland.

What the German technocrats REALLY don’t want to tell voters is the REASON they are going to be soaked to pay for Greek profligacy:

GERMAN BANKS own a lot of that Greek debt, so if Greece defaults, those banks may collapse. The government will soak the taxpayers to prevent collapse of the banks. PERHAPS it has to, because if the banks collapse, it might really produce a deep, deep Depression.

It is sort of like how the USA got into World War I. J.P. Morgan loaned huge sums to France and Britain — neither of which could afford to fund their military efforts on tax revenues alone, or on domestic borrowing. Morgan convinced President Wilson that if the Allies lost, he would never be repaid, the House of Morgan would collapse, and the U.S. would go into Depression. Ergo, we drafted a huge army to go save France and Britain.

Then there are the Greek people, who were lied to be their own conservative government that its OK to cut taxes or wink at massive tax evasion, while still keeping up some semblance of social program, because we can always borrow the money from German banks. Now people are, rightly, complaining about austerity measures being imposed upon them, but, the debt has been contracted, and there is no alternative. The problem is that they were lied to in the first place, and that politics is so fickle that “you lied to me ten years ago” or even five years ago, doesn’t make or break election results. If it did, Republicans would have suffered disastrous defeat in 2010.

Voters in most countries think only as far ahead (or behind) as “I’m in pain, vote out whoever is in.”